Gazprom Neft intends to fully use Russia’s increase in oil output quota as part of the OPEC+ deal starting August and expects to surpass a pre-crisis level of hydrocarbons output in 2021, the company said Aug. 19 in a conference call.
In its quarterly results, Gazprom Neft said it maximized opportunities from a positive situation in the market in the second quarter, increasing operational and financial indicators.
“In the second half of the year, we expect growth and plan to reach a level higher than pre-crisis 2019,” deputy CEO Alexei Yankevich said during the call.
Gazprom Neft’s hydrocarbons output amounted to 96.10 million mt in 2019, or 1.95 mil b/d of oil equivalent.
CEO Alexander Dyukov had previously said that the company was seeking to push hydrocarbons output to 100 million mt in 2021 even if oil production limitations under the OPEC+ pact remain in place.
“We plan to make the most of opportunities as part of [Russia’s] additional production quota which is extra 100,000 b/d every month starting August until December,” Yankevich said. “If there’s anything additional, we will use it.”
In accordance with OPEC+ efforts to counter the impact of the coronavirus pandemic, the company cut oil output to about 1.06 million b/d in May 2020, compared to 1.33 million b/d in April 2020, when the deal was not yet in effect, according to the energy ministry’s data.
As the alliance has been gradually returning barrels to the market, Gazprom Neft was able to partially recover production, with its July oil output amounting to 1.13 million b/d.
In line with latest conditions of the OPEC+ deal reached in July, Russia will increase output by 100,000 b/d every month starting August, aiming to fully restore production to pre-crisis levels by May 2022.
Q2 results
In the second quarter, Gazprom Neft boosted hydrocarbons production to 24.37 million mt of oil equivalent, or about 1.98 million b/d of oil equivalent, up 1.87% on the year and 1.2% higher on the quarter mainly due to the easing of OPEC+ cuts.
The company’s crude and condensate production rose 0.8% year on year and 1.4% quarter on quarter to 113.57 million barrels.
Output volumes were supported by an increase in gas production, which amounted to 387.83 Bcf in the second quarter, up 3.7% on the year and 0.6% on the quarter.
The company increased gas output after commissioning of the gas processing line at the Vostochno-Messoyakhskoye oil field in mid-2020 and the launch of infrastructure at the oil and gas Tazovskoye field in June.
Gazprom Neft also increased refining volumes to 10.68 million mt in Q2, up 15.8% on the year and 7% on the quarter.
Oil refining volumes increased as a result of demand recovery due to the gradual lifting of coronavirus restrictions, as well as the completion of repairs at the Pancevo refinery in the first quarter.
Overall, Gazprom Neft said its operational and financial results were “on a growing curve” in Q2.
“The company has successfully passed the crisis associated with the pandemic and we can say that we are already getting out of it,” Yankevich said.
Together with improving demand, oil prices have been continuously rising in 2021, helped by successful vaccine rollouts and the lifting of lockdown measures. S&P Global Platts assessed Russia’s Urals crude at $60.49/b CIF Med at the start of the second quarter on April 1, which reached $73.27/b by June 30.
Source: Platts